Correlation Between EROAD and Gold Road
Can any of the company-specific risk be diversified away by investing in both EROAD and Gold Road at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining EROAD and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EROAD and Gold Road Resources, you can compare the effects of market volatilities on EROAD and Gold Road and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in EROAD with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of EROAD and Gold Road.
Diversification Opportunities for EROAD and Gold Road
Pay attention - limited upside
The 3 months correlation between EROAD and Gold is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding EROAD and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources and EROAD is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on EROAD are associated (or correlated) with Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of EROAD i.e., EROAD and Gold Road go up and down completely randomly.
Pair Corralation between EROAD and Gold Road
Assuming the 90 days trading horizon EROAD is expected to generate 0.98 times more return on investment than Gold Road. However, EROAD is 1.02 times less risky than Gold Road. It trades about 0.06 of its potential returns per unit of risk. Gold Road Resources is currently generating about -0.04 per unit of risk. If you would invest 82.00 in EROAD on August 25, 2024 and sell it today you would earn a total of 2.00 from holding EROAD or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EROAD vs. Gold Road Resources
Performance |
| Timeline |
| EROAD |
| Gold Road Resources |
EROAD and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EROAD and Gold Road
The main advantage of trading using opposite EROAD and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EROAD position performs unexpectedly, Gold Road can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gold Road will offset losses from the drop in Gold Road's long position.| EROAD vs. Microequities Asset Management | EROAD vs. National Australia Bank | EROAD vs. Perpetual Credit Income | EROAD vs. Queste Communications |
| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Aneka Tambang Tbk | Gold Road vs. De Grey Mining |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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